Ask yourself: When was the last time you wrote a check to pay for sneakers?
Hopefully for folks in line behind you, it’s been awhile! Checks have widely gone by the wayside as checkout lines have modernized and more commerce shifts online. Shoppers today have access to digital payment options like mobile wallets, which can store credit or debit card information to make a purchase from a smartphone, tablet or smartwatch. Digital wallets are being used for business and the use cases for mobile wallet technology are incredibly valuable not just for consumers but communities disconnected from credit cards and the “unbanked” population.
In North America, mobile wallet adoption is expected to increase by 50% from 2020 to 2025 as cashless transactions and contact-free payments continue to become the rule, not the exception. Additionally, millennials are increasing their usage of mobile and online banking by as much as 60%.
Enter: The Dwolla Balance
The Dwolla Balance is wallet-like functionality and a powerful component of the Dwolla Platform. Dwolla Clients, as well as their Verified Customers, can hold or move funds in and out of their balance, as if it were a wallet.
Funds going in and out of a Dwolla Balance held and transferred by our financial institution partners. Dwolla’s wallet-like functionality allows Verified Customers to hold funds within an application and seamlessly transact with other users. A user or Dwolla Client with a Dwolla Balance can send payments via ACH, Real-time Payment or to a debit card with Push-to-Debit.
To illustrate the value of this functionality, let’s walk through how clients use the Dwolla Balance as a digital wallet for businesses, from the most basic to niche use cases.
Marketplace Payments: 2 Users Transacting
A marketplace application is attracting users who are either sellers or buyers. In a Dwolla-supported marketplace, give each of those users a wallet in the form of a Dwolla Balance, where the buyer can load their funds before shopping and automatically transfer them to the seller, within the application. With Dwolla’s white-label payment API, the seller and buyer stay in your user experience to transact, with Dwolla’s technology integrated behind the scenes to keep track of the payments.
The marketplace facilitating these payments can charge a fee for that service, which the marketplace can automate using Dwolla’s “facilitator fee” functionality. Internally, operational teams access the Dwolla Dashboard to track and monitor activity. Roles and permissions can be assigned to give multiple stakeholders access.
Disbursements: Timely Payouts to Policyholders
Insurance companies looking to improve their user experience can dramatically shorten the timeline of getting claim payments to policyholders by initiating the disbursement from an online wallet. Instead of waiting two weeks for a check to be mailed and deposited, disbursements from the Dwolla Balance can be reconciled on the same day, with funds potentially available to the policyholder in seconds if the company uses RTP®.
Pre-funding a Dwolla Balance allows for faster transfers once the user is ready to make a payment. There are various use cases where it makes sense for a business to use a digital wallet, either to hold funds in their balance until they need to make a payment or preload when they expect higher volume.
Let’s imagine a scenario where a Dwolla Client needs to initiate 100 different disbursements at once.
Transfer 1 – Bank to Dwolla Balance
Expecting a higher number of transactions this month, the first step to making sure there are enough funds available is to preload the Dwolla Balance. This can happen at any time in preparation for an expected payout scenario. On shorter deadlines, preload your balance faster using Same Day ACH debits and make the funds available in the Dwolla Balance on the same business day. Planning ahead? Standard ACH and Next Day ACH transactions are just as reliable and even more affordable.
Transfer 2 – Dwolla Balance to an End User’s Bank
Once the balance is loaded, a Client can initiate disbursements using any combination of ACH, Real-time Payments or Push-to-Debit transactions and the Mass Payment feature of the Dwolla Platform.
A single API request can initiate up to 5,000 transactions at once, completing the job in roughly 15 minutes.
Instant Payments: Transfers Between 2 Dwolla Balances
What’s faster than same-day payments? How about instant payments?
Switching to a peer-to-peer (P2P) payments scenario, let’s imagine your application is facilitating a payment between two users who both have a Dwolla Balance.
In this case, if funds are preloaded in the sender’s balance, once a transfer is created, funds immediately become available in the receiver’s balance.
The receiver would then have the choice to let more funds accumulate or initiate a withdrawal to the linked bank account at any time.
Balance Ledgering: Account & Transaction History
The ledger feature of the Dwolla Platform is constantly updating the account and transaction history for any activity. When a business initiates thousands of transactions in a month, there’s a lot of noise when looking at a bank statement and paging through the thousands of line items.
With Dwolla as your digital organizer, there are no secrets. Every activity is reportable, from failed transactions to dollars sent and received.
When a Payment Goes Bad: Handling Returned Transactions
Let’s revisit our earlier scenario where an insurance company is using its application to send funds from its Dwolla Balance to a policyholder’s bank account using ACH.
Unbeknownst to the insurance company, the policyholder has closed their bank account.
In this situation, the policyholder’s bank would issue an ACH return. The funds would return to the insurance company’s Dwolla Balance and Dwolla would notify the insurance company using a webhook. This all happens automatically through the Dwolla API.
From the Dwolla Dashboard, operational teams can monitor payment activity and address returned transactions. The insurance company can choose to send the returned funds back to its bank account or leave them in its Dwolla Balance until a resolution is reached.
More Than a Feature
While this is not an exhaustive list of how the Dwolla Balance can be utilized as a digital wallet for business, these examples show how important this technology is to the Dwolla Platform. Online wallets enhance the payment experience for end users, while alleviating a lot of manual processes for internal stakeholders.